Chinese firm selects Louisiana site for $1.2B chemical plant

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Dive Brief:

China-based Wanhua Chemical Group and Louisiana Gov. John Bel Edwards announced Friday that the company will build a $1.25 billion MDI (methylene diphenyl diisocyanate) chemical manufacturing plant on a 250-acre site in Convent, St. James Parish, Louisiana. MDI is used in a wide variety of polyurethane products such as spray foam insulation.

The new facility, which will have rail and Mississippi River access, is expected to create 1,000 construction jobs at peak activity, as well as 1,230 permanent indirect and direct jobs in Louisiana, 170 of those at an average annual salary of more than $80,000. In return, Louisiana has committed to an incentive package for Wanhua that includes access to the state's workforce training program, Quality Jobs and Industrial Tax Exemption programs and a performance-based grant of $4.3 million toward infrastructure costs. Construction is expected to begin in 2019 and wrap up in 2021.

Wanhua has been operating in the U.S. for more than 10 years and said it decided to build the Louisiana facility in order to better serve its North American customers and to broaden its range of products. "Our infrastructure assets enable us to compete for the leading economic development projects in the world," said Edwards. "We welcome Wanhua to Louisiana and look forward to the company’s contribution to our workforce and economy.”

Dive Insight:

A recent report from China Knowledge suggested that one of the factors driving Wanhua's decision to build a plant in Louisiana is the company's desire to avoid a 10% tariff on its MDI products. Manufacturing in the U.S. will eliminate that duty and enable Wanhua to be more competitive in the North American market.

Wanhua joins other companies building MDI plants in the Gulf Coast region of the U.S. Last month, German manufacturing company Covestro announced it was going to invest 1.5 billion euros in the construction of an MDI facility plant in the Houston-area city of Baytown, Texas. The new "world-scale" plant will be able to produce 500 kilotons of the chemical each year and will replace an existing 90-kiloton train already on the Covestro-owned site. The expanded Baytown facility will be the company's largest U.S. production site and will employ 1,000 people, according to The Houston Chronicle.

Earlier this year, Taiwan-based Formosa Petrochemical Corp. announced that it would build a $9.4 billion manufacturing facility near the site of Wanhua's future MDI plant in St. James Parish. When the factory is complete, Formosa will produce ethylene, propylene, ethylene glycol and related polymers. Construction is expected to create jobs for as many as 8,000 workers at its busiest. Louisiana will contribute $12 million of incentives tied to job creation.